The Pension Fund Battle

By Sean Stillmaker in News on Jun 20, 2010 2:30PM

The deadline is approaching for Gov. Quinn to wrangle more votes for the $3.7 billion pension borrowing plan. The house passed the bill, but Senate President John Cullerton D-Chicago said he would not reconvene the senate without bipartisan support before the fiscal year ends on June 30.

The money borrowed would be used to make the mandatory annual state payment to the five public employee pension systems. Currently the pension funds exceed $80 billion in unfunded payments. The state failed to make full annual payments since the “Pension Ramp” bill in 1995 and money borrowed to make the payments was used instead to cover the state’s operating budget, according to the report by the Illinois Pension Modernization Task Force. Making pension fund payments should be the first appropriation each year, and creating additional growth funds to pay down the debt, according to the Illinois Policy Institute's pension funding and fairness act.

Gov. Quinn signed the pension revamp bill in April that boasts savings of $300 million in the first year. Under the revamp new employees will have to work 10 years and cannot collect until the new general retirement age of 67, the highest of any state. Additionally payments are capped at $106,800 a year. Despite good intentions critics speculate a financial implosion. “We’re within a few years of having some of the pension funds run out of money,” R. Eden Martin, president of the Commercial Club of Chicago, a participant in the pension report, told the New York Times.